MYEFO here, at 11.00 am
OECD growth forecasts
2011 2012 2013
Australia 1.8% 4.0% 3.2%
Euro zone 1.6% 0.2% 1.4%
United Kingdom 0.9% 0.5% 1.8%
United States 1.7% 2.0% 2.5%
Real GDP growth, year on year
Source: OECD Economic Outlook
New OECD forecasts released overnight give Australia the fastest growth in the developed world in 2012: a year-on-year rate of 4 per cent, equaled only by Chile and approached only by Korea at 3.8 per cent.
Nations using the euro as currency are expected to grow by only 0.2 per cent in 2012, the United Kingdom 0.5 per cent the United States 2 per cent. Average among members of the Organisation for Economic Co-operation and Development will be just 1.6 per cent.
The organisation says vigorous investment and exports buoyed by the mining boom should offset the negative effects of a persistently strong dollar and budget cutbacks.
Should the global economy deteriorate further there is room for stimulus spending and tax cuts although these would “postpone the return to budget surplus”.
OECD forecasts are generally in line with those of Australian Treasury. The forecasts released overnight reflect those released by the Reserve Bank earlier this month and suggest only limited downward revisions to growth when the mid-year budget update is released later today.
The OECD says the euro zone appears already be in recession and the United States could fall “into a recession that monetary policy can do little to counter” if it doesn’t loosen its budget settings.
“In view of the great uncertainty policy makers now confront, they must be prepared to face the worst,” the report says. A large negative event would “most likely send the OECD area as a whole into recession with marked declines in activity in the United States and Japan, and prolong and deepen the recession in the euro area”.
Published in today's SMH and Age
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